Adobe is increasingly unhappy over Microsoft’s attempts to freely incorporate Adobe’s popular portable document format software into the forthcoming Office 2007 suite.

Ongoing negotiations between the two firms over the past four months seem to have broken down, which might result in a square-off in the European courts.

Adobe’s PDF technology lets companies create secure electronic versions of documents. The PDF format is widely used and is now established more or less as a de facto standard for posting downloadable documents on the web. Adobe’s Acrobat products are used to read and or write PDF documents.

Adobe’s main bone of contention seems to be around charging Office customers an additional fee for using the PDF capability. Abode wants Microsoft to offer it as a separate, paid feature to customers or remove it altogether from Office 2007.

Adobe believes that by including PDF features into Office applications like Word, Microsoft could have an adverse impact on its Acrobat software business.

While no clear resolution is in sight, it’s not certain whether Adobe is actually planning an antitrust suit in Europe as reports suggest.

Adobe officials were unavailable for direct comment.

But Microsoft did issue a prepared statement, attributed to spokesperson Stacy Drake, which suggests the company is prepared to bend to accommodate Adobe’s concerns with Office 2007 and Windows Vista.

But it seems only up to a point that Adobe still is not happy.

Drake said that company had taken significant steps and made many proposals to accommodate Adobe to avoid a dispute.

We have offered make changes to our products and even to ship their products with Windows, she said.

She explained that Microsoft was planning to remove to remove the Save as PDF and Save as XPS functions from Office and make them available as a separate download.

She added that Microsoft has also offered to ship Adobe’s Flash and Shockwave software with every copy of Windows Vista and give OEMs the option to remove XPS from Windows if they want.

But these changes don’t go far enough to satisfy Adobe it seems, which continues to pressure Microsoft to charge Office users for PDF features.

We have now reached a point where we feel what they are asking for is not in the best interests of our [Office] customers, Drake said. Adobe is asking us to charge our customers a price for using what everyone else in the world can use for free.

Microsoft might well have a case here.

PDF creation tools are already bundled freely into OpenOffice, an open source office suite that you can download from OpenOffice.org that includes similar word processing, spreadsheet, drawing and presentation tools as Office.

The result is that Adobe’s position could be seen as a bit hypocritical.

It doesn’t want Microsoft to offer PDF conversion tools for free, but doesn’t care that you can get the same result by downloading a copy of OpenOffice, which by the way, is Microsoft Office-compatible. In that case, you simply open a Word document in OpenOffice and, with a single click, export it to PDF.

Admittedly, the OpenOffice system isn’t perfect, because it doesn’t always faithfully render highly complex documents with multiple styles. But for relatively simple documents, it works.

While Adobe owns all the IP rights of the technology, it has opened up the technical APIs of the software to third-party companies, giving them leeway to build applications using PDF.

This is a point that Microsoft has latched onto.

Adobe has long claimed that PDF is an open standard and dozens of companies, including a number of our competitors, have implemented that standard, but Adobe insists we need to charge a price, Drake said.

Microsoft is of course no stranger to antitrust suits and is currently embroiled in similar disputes with several other software makers.

The company is still being investigated in Europe and the US over charges. Software rivals argue that it is abusing its monopoly of its Windows operating systems on corporate desktops.

Microsoft is being accused of unfairly bundling new software features that were previously sold as separate programs into Windows as a way to extend its reach into new software markets.

In May, security software maker Symantec Corp filed a lawsuit against Microsoft charging the company with theft of intellectual property and breach of contract. Symantec is seeking an injunction barring Microsoft from using Symantec technologies including its popular Norton antivirus software.